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Dairy Commodities Update

April 18, 2016

We started 2016 the way we ended 2015, with nonfat dry milk and whey languishing at low CME and Dairy Market News reported prices, whey proteins in a slump and the butter market perplexing us all. US milk production in the opening of 2016 mirrors the end of 2015, with production good-to-strong in the Midwest and East and poor in the West and Southwest.

2015 saw the end of the European Union’s more than 30- year run with a Central Planning style dairy quota system. This frees up farmers to produce what they want without fear of penalty, allowing the market to dictate price and production. That is said slightly tongue-in-cheek. They still have a government-supported intervention program that buys milk when it falls to a set price, not unlike our old Commodity Credit Corporation that would by powder at a default price. The US eliminated that program in favor of farmer-purchased margin protection insurance.

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